Doing business in Belgium
- How quickly can I set up a business?
- What is the minimum investment needed?
- How can I raise finance?
- What are the legal requirements for setting up my business?
- What structure should I consider?
- What advice can you give me in regards to payroll and taxation requirements?
- Is there anything else that I should know?
How quickly can I set up a business?
Setting up a company is fairly easy and can be done in less than two weeks.
Setting up a formal branch (of a non-Belgian company) is usually more time consuming since more formalities have to be complied with. It can take between one and two months.
Please note that contributions in kind (e.g., immovable property…) can slow down the process since an audited valuation report is required.
What is the minimum investment needed?
For establishments and private limited companies, no minimum equity requirements exist. In theory, they can be started with a contribution of 1 EUR. However, it is important to note that, apart from shareholders contributions, the company should dispose of sufficient resources to start and maintain activities. Such resources can be loans, income from the operational activity, etc.
Therefore, the minimum contribution mainly depends on the activity you would like to start. The financial plan is a key element in checking whether or not your contributions should be sufficient and assessing the founder’s liability in case things go wrong.
For public limited companies, minimum equity requirements exist. They require a minimum starting capital of 61.500 EUR, which must be wholly paid up. Furthermore, one-quarter of the contributions in cash or in kind, represented by the shares, must be fully paid up upon incorporation.
How can I raise finance?
Financing for activities can be raised by accepting capital contributions. Belgium has quite a large network of investment firms and angel investors.
Activities can also be financed with debt instruments such as loans both from shareholders and from third parties. Besides that, crowdfunding initiatives to start up your crowdfunding campaigns.
What are the legal requirements for setting up my business?
Setting up most companies (such as a private limited company and a public limited company) requires the following formalities:
• If a contribution in cash is made, the contribution is to be made on an account that remains blocked until incorporation. At incorporation, the notary will provide you with a document allowing you to request the release of your bank account.
• If a contribution in kind is made, an audited valuation report is required to make said contribution.
• A financial plan is required before setting up a company. It is a.o. that is used to assess the founder’s liability should the company go bankrupt in the first years after incorporation.
• Finally, a notarial deed is required to set up the company. Afterwards, the notary will take the necessary steps to have the incorporation deed published in the Belgian Official Gazette.
What structure should I consider?
Businesses in Belgium are generally set up as an establishment, a private limited company (“Besloten Vennootschap”) or public limited company (“Naamloze Vennootschap”).
An establishment is not a separate legal entity but merely an extension of an overseas company. Given the fact that the establishment lacks legal personality, there is no limited liability for the Belgian operations. Belgian profits of an establishment are subjected to corporate tax.
Private limited companies are intended to serve as a default structure for all types of small and mid-sized businesses. Its shares are not readily negotiable since new shareholders must be accepted by the general meeting, unless the articles of association state otherwise. The private limited company is managed by one or more directors (individuals or companies), not necessarily Belgian residents.
Summarizing, the private limited company can be seen as a default and a most flexible company structure. Please note, however, that strict rules apply for distributions (such as dividend distributions, redemption of shares, etc) in order to protect creditors. Both an asset test and a liquidity test are to be conducted under the liability of the board of directors.
Public limited companies are often used for larger enterprises and/or listed companies. It is founded by at least one member (individual or company). It requires a minimum starting capital of 61.500 EUR. It is managed by one or more directors (individual or company). Given the minimum starting capital, less strict rules apply for distributions apart from said asset test. This may be an incentive to incorporate smaller businesses as a public limited company instead of a private limited company.
What advice can you give me in regards to payroll and taxation requirements?
Brussels, Antwerp and Ghent can be attractive regions to set up your company taking into account its accessibility (proximity of the national airport, important seaports and important highroads). Liège can also be attractive for logistics companies or web shops as it has a large cargo airport nearby.
Payroll and HR:
Employers are liable to pay social security contributions for their employees amounting to 24,92% in 2021. The employee contributions amount to 13,07%. The employer is liable to transfer both employer and employee contributions to the social security administration.
The employer is also liable to apply a withholding tax on the employee’s salary (including benefits in kind). Remunerations and benefits in kind (e.g. stock options or restricted stock options) attributed by a non-resident group company to an employee of a Belgian group company are deemed to be attributed by said Belgian group company. Thus, the Belgian group company is obligated to apply the withholding tax.
The standard corporate tax rate in Belgium is 25%. A reduced rate of 20% applies to a first share of profits amounting to 100.000,00 EUR. The reduced rate is subjected to the following conditions:
• To be a SME company (not surpassing more than one of the following thresholds on a consolidated basis: 9Mio EUR turnover, 4.5Mio EUR balance sheet total, 50 employees).
• No financial fixed assets more than 50% of paid-in capital + taxed reserves.
• No company shareholders in excess or equal to 50%.
• Attributing 45K EUR in gross in salary to at least one manager (or a salary equal to the taxable base if lower then 45K).
Is there anything else that I should know?
Innovation Income deduction:
An attractive innovation income deduction applies to the income of in-house developments of a.o. patents, computer programs and plant breeders’ rights.
85% of the net qualifying innovation income can be deducted from the corporate income tax base.
Unused innovation deduction may be carried forward indefinitely as from 2018. The carry forward is limited to 70% of the taxable income exceeding 1 million EUR.
Belgium is particularly attractive as a location for a holding company because of the possibility of deducting interest expenses, within certain limits (including notional interest expenses), combined with a conditional 100% deduction for dividends received and a conditional tax exemption for capital gains realized on shares.
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From 1 April 2023, companies will need to digitally pre-notify HMRC of any planned R&D claims, and within six months of the end of the period to which the claim relates.
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